A post to the EA Forums from SimCity senior producer Kip Katsarelis explains the measures they are taking to address launch issues with the new SimCity, which include a server hotfix and a version 1.2 patch, but apparently no refunds (contrary to an early statement that said these would be offered). Word is they have temporarily cut off some features to help their servers cope with demand:

Server capacity is our biggest obstacle. We launched in North America on Tuesday and our servers filled up within a matter of hours. What we saw was that players were having such a good time they didn't want to leave the game, which kept our servers packed and made it difficult for new players to join. We added more servers to accommodate the launch in Australia and Japan, and then more yesterday to accommodate the launch in Europe. As of right now, we are adding even more servers which will be going live over the next three days. And, our plan is to continue to bring more servers online until we have enough to meet the demand, increase player capacity and let more people through the gates and into the game.

Earlier today, we released a patch that temporarily cut off some features including leaderboards, achievements and Cheetah Speed to reduce data stress on the servers and effectively free up space so that we can let more people into the game. These are great features that we're proud of and we'll turn them back on soon, but our number one priority is to bring stability to our servers. This update also resolved some of the bugs and issues that have been frustrating players. You can read all about it at http://forum.ea.com/eaforum/posts/list/9341807.page

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Quboid wrote on Mar 8, 2013, 19:39:My understanding was that the regional stuff is server side but the city simulation is client side. The city simulation is pretty detailed and is probably a CPU hog, there's no much that can be done about that without affecting everything.

This is what I'd read before launch and it is how it seems to act in-game. I've played about 8 hours and the city stuff has been fine. However, some of the region play is a bit wonky, for example I can't jump into a city, expand the power station, jump out and sell that extra juice as it takes several minutes to update the region.

The actual game is very good, but it's SimRegion rather than SimCity. SimSeveralSmallTowns.

I thought all the underlying "agents" in the city were also mostly done cloud-side?

In either case, the game apparently runs off one core, with some minor stuff handled by another core, so it's never going to win any awards for "well-written software."